Correlation Between Capcom Co and Doubledown Interactive

Can any of the company-specific risk be diversified away by investing in both Capcom Co and Doubledown Interactive at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Capcom Co and Doubledown Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capcom Co Ltd and Doubledown Interactive Co, you can compare the effects of market volatilities on Capcom Co and Doubledown Interactive and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Capcom Co with a short position of Doubledown Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capcom Co and Doubledown Interactive.

Diversification Opportunities for Capcom Co and Doubledown Interactive

-0.33

Correlation Coefficient

Capcom Co  Doubledown Interactive

Very good diversification

The 3 months correlation between Capcom and Doubledown is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co Ltd and Doubledown Interactive Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubledown Interactive and Capcom Co is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Capcom Co Ltd are associated (or correlated) with Doubledown Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubledown Interactive has no effect on the direction of Capcom Co i.e., Capcom Co and Doubledown Interactive go up and down completely randomly.

Pair Corralation between Capcom Co and Doubledown Interactive

Assuming the 90 days horizon Capcom Co Ltd is expected to generate 0.92 times more return on investment than Doubledown Interactive. However, Capcom Co Ltd is 1.08 times less risky than Doubledown Interactive. It trades about 0.12 of its potential returns per unit of risk. Doubledown Interactive Co is currently generating about -0.03 per unit of risk. If you would invest  1,092  in Capcom Co Ltd on December 29, 2024 and sell it today you would earn a total of  188.00  from holding Capcom Co Ltd or generate 17.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Capcom Co Ltd  vs.  Doubledown Interactive Co

Capcom Co

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capcom Co Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Capcom Co showed solid returns over the last few months and may actually be approaching a breakup point.

Doubledown Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Doubledown Interactive Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Doubledown Interactive is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Capcom Co and Doubledown Interactive

The main advantage of trading using opposite Capcom Co and Doubledown Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capcom Co position performs unexpectedly, Doubledown Interactive can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Doubledown Interactive will offset losses from the drop in Doubledown Interactive's long position.

The idea behind Capcom Co Ltd and Doubledown Interactive Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.